Thursday, May 08, 2014

Why would the Congress lose the election?

What exactly is likely to cost the Congress the 2014 election? An FT commentator thinks it's not the growth slowdown or even rising inflation. It is the change in the voter profile over the years. The poor are no longer the dominant constituency with the proportion of those below the poverty line falling to 22%. And yet the Congress' policies have been targeted towards the poor, rather than the dominant segment with rising aspirations. The latter need jobs, not doles:

India in 2014, in other words, is not the same country it was in 2004. Congress’s undoing is that it has failed to recognise this. It has instituted socially laudable right-to-work and right-to-food programmes. But such schemes are costly and prone to rampant theft. By putting a strain on the Treasury, they have contributed to persistent inflation. That in turn has forced the central bank to raise interest rates, slowing growth.

..Most Indians are no longer satisfied with the make-work schemes or food handouts in which Congress has increasingly specialised. Many have caught the whiff of a better life. Now they want jobs and opportunity. Even those who have not yet clawed their way on to the bottom rung of the aspirational ladder have seen what it looks like, courtesy of the satellite television channels that beam images of a middle-class life into even the most benighted corners of the country. India’s villages are not what they once were. The bullock cart has given way to the motorbike; the dirt road to tarmac.
This is a rather simplistic explanation, I'm afraid. The UPA's schemes are targeted not just at the poor but at those above the poverty line as well. Schemes such as MNREGA and the right to education are not just for the poor. Subsidies, including those on cooking gas and even food, are intended for the middle class and those above the poverty line. Indeed, it could well be that it is the trend towards targeting of subsidies only for the poor that has alienated the middle class.

The other problem with the explanation is that it fails to tell us why the BJP, in its manifesto, is not arguing for the dismantling of subsidies and welfare schemes. As I have pointed out in my blogs, Mr Modi has been saying something to the contrary of late. He has argued, for instance, that MNREGA should be made more efficient- say, in terms of creating assets. He has not said the scheme should be wound up. He has also said subsidies must stay. If the FT commentator's thesis were correct, the BJP should be singing a different tune.

Whatever the statistics on poverty, it is more than likely that, in the medium-term, no government can afford any economic policy that is not centrist or even slightly to the left of centre. We have to look elsewhere for the disenchantment with the Congress. Mr Modi appeals on the strength of the fact that he is a self-made man, has not amassed wealth for himself and has a solid track record in Gujarat.

The Congress, in contrast, is projecting Rahul Gandhi, who is seen as a privileged scion of a dynasty, the UPA is tainted with corruption charges and Gandhi has yet to prove himself in an administrative capacity. The perceived diminishing of the office of PM under Manmohan Singh could also be a factor. Rightly or wrongly, the perception has gained ground that India needs a strong leader as PM and that Mr Modi could be that leader.

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